January 7, 2022 8:59:51 pm
Sri Lanka could face shortage of fuel by the third week of January, Energy Minister Udaya Gammanpila warned on Friday, as he urged the Central Bank to step in and pump in foreign currency required for imports.
Gammanpila’s grim warning comes close on the heels of the Ceylon Electricity Board issuing a statement, asking citizens to brace for power cuts in the days to come due to its inability to purchase fuel.
The Sri Lankan government on Tuesday had announced a USD 1.2 billion economic relief package amidst a severe foreign exchange crisis grappling the island nation.
At the beginning of December last year, the forex reserves were sufficient for just a month of imports.
However, last week, the Central Bank of Sri Lanka announced that the country’s foreign exchange reserves had doubled in the span of just one month, and touched USD 3.1 billion.
According to sources, the forex reserve boost was buoyed by a 10 billion-yuan (USD 1.6 billion) currency swap agreement signed with China on March 21 this year.
“There is this looming danger which I have informed the Cabinet no less than on 8 occasions. The Central Bank has to ensure Letters of Credit can be opened for cooking gas and fuel. We could substitute imported food with some local varieties, but for fuel it is not possible,” Gammanpila said.
The Energy Minister’s comments come hours after the Sri Lankan government had signed an agreement with India jointly redevelop the strategic World War II-era oil tank farm in the island nation’s eastern port district of Trincomalee, in a new milestone in bilateral economic and energy partnership.
The severe foreign currency shortage and a credit rating downgrade by Fitch had forced the country’s only 50,000-barrel-per-day oil refinery to shut down from January 3.
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